24814
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 4th day of January, 1999, by and between First
Union National Bank, a national banking association, ("the Advisor"), and Xxxxxx
Investment Management, Inc., a Massachusetts corporation ("the Manager").
WHEREAS, the Advisor has been appointed to serve as investment Advisor
of the Evergreen Masters Fund ("A Fund"), a series of Evergreen Equity Trust
("the Trust"), a Delaware business trust which has filed a registration
statement under the Investment Company Act of 1940, as amended ("xxx 0000 Xxx")
and the Securities Act of 1933 ("the Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Fund; and
WHEREAS, the Advisor desires to avail itself of the services, advice
and assistance of the Manager to assist the Advisor in providing investment
advisory services to the Fund; and
WHEREAS, the Manager is registered under the Investment Advisers Act of
1940, as amended ("the Advisers Act"), is engaged in the business of rendering
investment advisory services to investment companies and other institutional
clients and desires to provide such services to the Advisor;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follow:
1. Employment of the Manager. The Advisor hereby employs the Manager to
manage the investment and reinvestment of that portion of the Fund which the
Advisor allocates to the Manager from time to time ("the Account"), subject to
the control and direction of the Trust's Board of Trustees, for the period and
on the terms hereinafter set forth. The Manager hereby accepts such employment
and agrees during such period to render the services and to assume the
obligations herein set forth for the compensation herein provided. The Manager
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Advisor, the Fund or the Trust in
any way. The Manager may execute account documentation, agreements, contracts
and other documents requested by brokers, dealers, counter parties and other
persons in connection with its management of the Account.
2. Rebalancing of the Fund. In addition to the Manager, the Advisor
intends to appoint three other sub-Advisors to assist in the management of the
Fund's assets, and to allocate to each sub-Advisor 25% of all Fund inflows from
share sales and distribution reinvestments and 25% of all Fund outflows from
share redemptions and cash distributions. The Advisor and the Manager
acknowledge that market action may result in each sub-Advisor managing more or
less than 25% of the Fund's assets at any point in time. The Advisor agrees that
it will not actively reallocate Fund assets among the sub-Advisors unless
average daily net assets allocated to one sub-Advisor (i) exceeds 35% or (ii) is
less than 15%, in each case of average daily net assets of the Fund for three
consecutive calendar months. Upon the occurrence of such an event, the Advisor
may, but shall not be obligated to, reallocate Fund assets among the
sub-Advisors so as to provide for more equal distribution of Fund assets among
sub-Advisors. The Advisor shall provide each sub-Advisor affected by such
reallocation with at least 30 days prior notice thereof.
3. Obligations of Services to be Provided by the Manager. The Manager
undertakes to provide the following services and to assume the following
obligations:
a. The Manager shall manage the investment and reinvestment of the
portfolio assets of the Account, all without prior consultation with the
Advisor, subject to and in accordance with (i) the investment objective and
policies of the Fund set forth in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect, as provided to the
Manager, ("the Governing Documents")(ii) the requirements applicable to
registered investment companies under applicable laws, including without
limitation the 1940 Act and Subchapter M of the Internal Revenue Code of 1986,
as amended ("the Code") and (iii) any written instructions which the Advisor or
the Trust's Board of Trustees may issue from time-to-time; provided, however,
that for purposes of determining compliance with the Governing Documents and
with applicable law, the Manager may treat the Account as if it constituted the
entire Fund. The Manager also agrees to conduct its activities hereunder in
accordance with any applicable procedures or policies adopted by the Trust's
Board of Trustees, as provided to the Manager, as from time to time in effect
(the "Procedures"). The Advisor has provided to the Manager copies of all
Governing Documents and Procedures and shall promptly provide to the Manager any
amendments or supplements thereto. Subject to and in pursuance of the foregoing,
the Manager shall make all determinations with respect to the purchase and sale
of portfolio securities and shall take such action necessary to implement the
same. The Manager shall render such reports to the Trust's Board of Trustees and
the Advisor as they may reasonably request concerning the investment activities
of the Account. Unless the Advisor or the Trust's Board of Trustees gives the
Manager written instructions to the contrary, the Manager shall, in good faith
and in a manner which it reasonably believes best serves the interests of the
Account's shareholders, direct the Account's custodian as to how to vote such
proxies as may be necessary or advisable in connection with any matters
submitted to a vote of shareholders of securities held in the Account.
b. Absent instructions of the Advisor to the contrary, the Manager
shall, in the name of the Fund, place orders for the execution of portfolio
transactions with or through such brokers, dealers or other financial
institutions as it may select In the selection of such brokers or dealers and
the placing of such orders, the Manager shall use its best efforts to obtain for
the Account the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the account the most favorable price and execution available, the Manager,
bearing in mind the Account's best interest at all times, shall consider all
factors it deems relevant, including by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the Trust may
determine and have been communicated in writing to the Manager, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused the
Account to pay a broker or dealer that provides brokerage and research services
to the Manager an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager determines in good
faith that such amount of commission was reasonable in relation to the value of
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Manager's overall
responsibilities with respect to the account and other clients of the Manager as
to which the Manager exercises investment discretion.
c. In connection with the placement of orders for the execution of the
portfolio transactions of the Account, the Manager shall create and maintain all
necessary records pertaining to the purchase and sale of securities by the
Manager on behalf of the Account in accordance with all applicable laws, rules
and regulations, including but not limited to records required by Section 31(a)
of the 1940 Act. All records shall be the property of the Trust and shall
available for inspection and use by the Securities and Exchange Commission
(ASEC@), the Trust, the Advisor or any person retained by the Trust at all
reasonable times. Where applicable, such records shall be maintained by the
Manager for the periods and in the places required by Rule 31a-2 under the 0000
Xxx.
d. The Manager shall bear its expenses of providing services pursuant
to this Agreement.
4. Compensation of the Manager. In full consideration of services
rendered pursuant to this Agreement, the Advisor will pay the Manager a fee at
the annual rate set forth in Schedule A hereto of the value of the Account's
average daily net assets. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month. If the Manager shall serve for
less than the whole of any month, the foregoing compensation shall be prorated.
For the purpose of determining fees payable to the Manager, the value of the
Account's net assets shall be computed at the times and in the manner that the
Fund=s net assets are computed, as specified in the Governing Documents.
5. Other Activities of the Manager. The services of the Manager
hereunder are not to be deemed exclusive, and the Manager shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired.
6. Use of Names. The Advisor shall not use the name of the Manager or
any of its affiliates in any prospectus, sales literature or other material
relating to the Trust or the Fund in any manner not approved prior thereto by
the Manager; provided, however, that the Advisor may use the name of the Manager
and its affiliates in any such material that merely refers in accurate terms to
the Manager's appointment hereunder. The Manager shall not use the name of the
Trust or the Advisor in any material relating to the Manager in any manner not
approved prior thereto by the Advisor; provided, however, that the Manager may
use the name of the Advisor or the Trust in any material that merely refers in
accurate terms to the appointment of the Manager hereunder. Neither the Advisor
nor the Trust shall use or refer in any way the name of the Manager following
termination of this agreement without the Manager's consent except as may be
required by law.
7. Liability of the Manager. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Manager, the Manager shall not be liable for any act or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security.
Subject to the foregoing, nothing herein shall constitute a waiver of any rights
or remedies which the Trust may have under any federal or state securities laws.
8. Limitation of Trust's Liability. The Manager acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Manager agrees that any
of the Trust's obligations shall be limited to the assets of the Fund and that
the Manager shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
9. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance is specifically approved at least annually by vote of the holders of
a majority of the outstanding voting securities of the Fund or by vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated at any time without
payment of any penalty, by the Trust=s Board of Trustees, by the Advisor, or by
a vote of a majority of the outstanding voting securities of the Fund upon 60
days, prior written notice to the Manager or by the Manager upon 90 days' prior
written notice to the Advisor, or upon such shorter notice as may be mutually
agreed upon. This Agreement shall terminate automatically and immediately upon
termination of the Management Agreement between the Advisor and the Trust. This
Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and Avote of a majority of the outstanding
voting securities' shall have the meaning set forth for such terms in the 1940
Act. This Agreement may be amended at any time by the Manager and the Advisor,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Fund's
outstanding voting securities.
24814
24519
10. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation. The Advisor hereby
consents to the disclosure to third parties of investment results and other data
of the Account in connection with providing composite investment results and
related information of the Manager.
11. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of The
Commonwealth of Massachusetts. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed in
several counterparts, all of which together shall for all purposes constitute
one Agreement, binding on the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxx
__________________________
Authorized Officer
XXXXXX INVESTMENT MANAGEMENT, INC.
By:/s/ Xxxx Xxxxxx
_____________________________
Authorized Officer
SCHEDULE A
Evergreen Masters
Fund 0.50% of average daily net assets of the
Account; provided, however, that the fee
for the twelve months ending December 31,
2000 shall not be less than $125,000. The
difference, if any, between such amount
and the aggregate fee actually paid
during such twelve month period shall be
paid no later than January 31, 2001.
